Michigan Automobile Insurance Placement Facility P.O. Box 33617, Detroit, Michigan 48232-5617 17177 N. Laurel Park Drive, Suite 243, Livonia, Michigan 48152-2647 Phone: (734) 464-1100 Fax: (734) 464-0009 E-Mail: info@maipf.org June 11, 2003 MINUTES OF THE THIRTY-SECOND ANNUAL MEETING OF THE MICHIGAN AUTOMOBILE INSURANCE PLACEMENT FACILITY HELD ON MAY 22, 2003 MEMBER COMPANIES PRESENT: *AIU Insurance Company Allstate Insurance Company *American Home Insurance Co. *American International Ins. Co. *American International South Ins. Co. Amerisure Mutual Insurance Co. Auto Club Group Insurance Co. Auto Club Insurance Association Auto-Owners Insurance Company *Chubb Group of Ins. Companies Citizens Insurance Co. of America *Commerce & Industry Insurance Co. *Frankenmuth Mut. Ins. Company *Granite State Insurance Company Hanover Insurance Company Hastings Mutual Insurance Company *Illinois National Insurance Company *Insurance Co. of the State of PA *National Union Fire Insurance Co. *Nationwide Insurance Companies *New Hampshire Insurance Company State Farm Fire & Casualty Company State Farm Mutual Auto Insurance Co. *Stratford Insurance Company *USAA *USAA Casualty Ins. Company REPRESENTED BY: R. Nicholas L. Lange, R. Saranen & P. Scheske L. Lange, R. Saranen & P. Scheske J. Tagsold T. Morante G. Slingerlend T. Morante G. Slingerlend *Represented by Proxy OTHERS PRESENT: Producer Representatives Public Representative Office of Financial & Insurance Services Michigan Auto Ins. Placement Facility L. Bostic & C. Locker L. Quinn & L. Rodney S. Liddle T. Miller, D. Barnette, C. Grabowski, N. Hier & C. Pirie The thirty-second annual meeting of the Michigan Automobile Insurance Placement Facility was called to order, and those present were asked to introduce themselves. Upon a motion being made, seconded, and carried, the reading of the minutes of the thirty-first annual meeting was waived.
2 Reports were then presented by the chairman of the Board of Governors and the general manager of the Facility (see attached). Following their remarks, the general manager asked for any additional nominations for the Board s upcoming term. There being none, a motion was made, seconded, and carried that the nominations be closed. Ballots were tabulated, and the results of the election for the seven company positions on the Board of Governors for the 2003/2004 term were announced as follows: State Farm Mutual Auto Ins. Co. 23,472,666 Auto Club Insurance Association 17,723,757 Allstate Insurance Company 10,997,348 Auto-Owners Insurance Company 10,743,589 Citizens Ins. Co. of America 10,092,737 Amerisure Mutual Insurance Company 4,043,371 Hastings Mutual Insurance Co. 2,956,235 82,910,326 There being no additional business to address, the thirty-second annual meeting of the Michigan Automobile Insurance Placement Facility was adjourned. Respectfully submitted, TAM/CP/cp Attachments Terri A. Miller, CPCU General Manager
MICHIGAN AUTOMOBILE INSURANCE PLACEMENT FACILITY BOARD CHAIRMAN REPORT ANNUAL MEETING - MAY 22, 2003 On behalf of the MAIPF Board of Governors and MAIPF staff, I would like to welcome you to the 2003 annual meeting. I am Terry Mack of State Farm Insurance, the current chair of the MAIPF Board of Governors. MAIPF enjoyed another very productive year in 2002. Application volume continued to increase in 2002 and reached the highest annual levels since 1998. In spite of the significant policy growth, the MAIPF operation was able to maintain its high standard of excellence. The continued refinement of MAIPF rates lead to a substantial private passenger rate increase in 2002 as underwriting experience worsened. Work with AIPSO continues on the automated application process and initial phases look to be implemented in 2003. This process should increase efficiencies for all concerned. We will also be working on a revised Servicing Carrier Agreement this year with changes to be discussed at the August Board meeting. This is the first contract revision in many years. Terri Miller continues to provide strong management to the day-to-day activities at MAIPF. In addition, her long range thinking and planning provides great benefit to MAIPF as we move ahead. Our dedicated MAIPF staff provides excellent service to all segments of the market including consumers, producers, regulators, and subscribers. Donna Barnette has completed a productive first year as the replacement for Nancy Mattern. We thank Donna for her efforts. All of MAIPF's subcommittees continue to provide meaningful input to the Board. Without their efforts, the functioning of the Board would be much more difficult. Thanks to all the members of the subcommittees and especially to the chairpersons for their excellent work. The Board will continue to rely on your suggestions and advice. To the Board of Governors. I say thanks for your dedication and commitment. While divergent interests are represented, the Board does a good job of balancing issues and arriving at solutions equitable to all. A special thank you goes to Sandy Liddle of the Insurance Bureau. We appreciate your support and cooperation. In addition we look forward to working with the new Commissioner, Linda Watters. The year 2003 will provide numerous challenges for MAIPF even with application volumes apparently decreasing. The Office of Financial and Insurance Services will conduct an examination of MAIPF. This is the first such examination in many years and we anticipate excellent results. With the Board's help, MAIPF will continue to be a cost effective organization. I eagerly await my continuing involvement with the Board of Governors and appreciate your support for me as the Chairman the past year. Thanks again for attending today. Respectfully submitted, Terry L Mack, CPCU, CLU State Farm Insurance MAIPF Board Chairman
MICHIGAN AUTOMOBILE INSURANCE PLACEMENT FACILITY GENERAL MANAGER S REPORT ANNUAL MEETING MAY 22, 2003 FACILITY VOLUME AND ACTIVITY FISCAL YEAR 2002 2002 2001 % Change Combined Direct Written Premium $60,324,788 $35,458,741 70.1% Combined Direct Earned Premium $54,249,894 $33,515,087 61.9% Combined Direct Incurred Losses $121,048,002 $125,488,477-3.5% Private Passenger Direct Loss Ratio 281.64% 494.54% Commercial Direct Loss Ratio 96.57% 76.90% Premium Charge-Offs (calendar year) $1,870,614 $822,414 2.61% 2.02% 29.2% Combined App Count (calendar year) 62,482 35,218 77.4% Policies In Force (calendar year) 29,421 18,384 60.0% Combined net results of operations ($33,977,574) $1,254,942 2003 2002 Servicing Carrier Fee PP Non-claims 14.50% 12.30% 17.9% Claims 8.00% 11.40% -29.8% Servicing Carrier Fee Comm l. Non-claims 12.10% 17.90% -32.4% Claims 14.20% 14.00% 1.4% FISCAL YEAR 2003 FIRST QUARTER, ENDING 12/31/02 For the first quarter of the current fiscal year, private passenger direct earned premium was $14,206,789, an increase of 94% over the same period in 2001. Direct incurred losses were $15,667,662; with reserve adjustments and ceded MCCA losses the total net loss ratio was 105% and the combined ratio was 129% for the quarter. For the same period, commercial direct earned premium was $5,389,316, an increase of 92% from the same period in 2001. Direct incurred losses were $2,079,860, and with reserve changes and ceded MCCA losses the total net loss ratio was 5.8% and the combined ratio 19.8%. There were 11,922 private passenger applications submitted a decrease of 13.5% from the prior year. There were 367 commercial applications, an increase of 15% over the prior year. OBSERVATIONS MAIPF market share increased from 0.46% in 2000 to 0.56% in 2001. The loss ratio for physical damage coverages decreased in fiscal year 2002 to 1.039 from 1.592 in fiscal year 2001. The loss ratio has decreased to.906 in the first quarter of fiscal year 2003. 1
FACILITY OPERATIONS Over the past year the Facility staff has made a number of significant accomplishments. First and foremost, the staff was able to handle a dramatic increase in applications while still providing a high level of service to producers and applicants. By limiting additional projects, working selective overtime shifts and updating workflows we were able to assume an increase of over 77% without additional staffing. Application volume has remained relatively strong despite a large rate increase in November 2002. The Facility was able to offer its first Continuing Education course in several years, which was presented to a group of State Farm producers. We have also developed a project plan for a webbased training course and are researching a commercial rating course. The Internet continues to provide us with many opportunities. We are in the testing phase of the project to introduce the Electronic Application and Rating System (EARS), which will allow producers to complete and rate private passenger applications on-line with automated aids such as VIN verification and app completion prompts. The MAIPF web site has continued to improve in functionality, as producers may now check for premiums owed on a prior Facility policy and may now access the AIPSO Symbol & Identification manual. Servicing carriers now have access to the Accounting & Statistical Manual and expanded Facility data. Board and committee members have instant access to Facility data and meeting information on our secure site. Facility staff has continued to work with producers on app completion and submission procedures using the Producer Performance Program. We conducted a number of training classes and hearings for producers in 2002 and began to utilize the Producer Disqualification Program for serious violations of Facility procedures. The HEAT Program also had a very successful year in 2002. We awarded $120,505 in tip rewards, and aided in the recovery of 105 vehicles and other stolen property valued at $1.7 million. We collaborated with the Automobile Theft Prevention Authority to produce a set of three law enforcement training videos that will be distributed state-wide during 2003. Michigan State Police Director Steve Madden was the keynote speaker at the 17 th Anniversary Breakfast, and the program continues to generate a great deal of interest and exposure in the print, radio and television media. The web site was also upgraded to accept tip information on-line. I would like to thank the Board of Governors, the committees and the OFIS representative for their contributions over the past year. I would also like to express my appreciation to the Facility staff for their dedication and commitment, especially considering the workloads over the past year. Special thanks to the management team of Christine Grabowski, Donna Barnette, Nina Hier and Cindy Pirie for their valuable insight and hard work as we make improvements to Facility operations. In conclusion, 2002 was a year presenting many challenges for the Facility, which were successfully met by the staff. I believe we are positioned well to continue to operate effectively and efficiently. Respectfully submitted, Terri A. Miller, CPCU General Manager 2
MICHIGAN AUTOMOBILE INSURANCE PLACEMENT FACILITY PARTICIPATING MEMBER COMPANIES - 2001 Acceptance Insurance Company Ace American Insurance Company Ace Fire Underwriters Ins. Company Acuity, A Mutual Insurance Company Aegis Security Insurance Company AIU Insurance Company Allied Property & Casualty Ins. Co. All America Insurance Company Allstate Indemnity Company Allstate Insurance Company Amco Insurance Company American & Foreign Insurance Company American Alternative Insurance Corp. American Auto Insurance Company American Bankers Ins. Co. of FL American Casualty Co. of Reading PA American Country Insurance Company American Economy Insurance Company American Employers Insurance Company American Family Home Ins. Company American Federation Ins. Company American Fellowship Mutual Ins. Co. American Fire & Casualty Company American General Indemnity Company American Guarantee & Liab. Ins. Co. American Hardware Mutual Ins. Co. American Home Assurance Company American Insurance Company American International Ins. Co. American International South Ins. Co. American Manufacturers Mut. Ins. Co. American Modern Home Insurance Co. American Motorists Ins. Co. American Protection Insurance Company American Reliable Insurance Company American Select Insurance Company American States Insurance Company American Zurich Insurance Company Amerisure Insurance Company Amerisure Mutual Insurance Company Amex Assurance Company AMICA Mutual Insurance Company Argonaut Great Central Insurance Company Associated Indemnity Corp. Associates Insurance Company Assurance Company of America Athena Assurance Company Atlantic Mutual Insurance Company Auto Club Group Insurance Company Auto Club Insurance Association Auto-Owners Insurance Company Balboa Insurance Company Bankers Standard Ins. Company Bituminous Casualty Corporation Bituminous Fire & Marine Ins. Co. Bristol West Insurance Company Brotherhood Mutual Insurance Company Carolina Casualty Ins Company Centennial Insurance Company Central Mutual Insurance Company Charter Oak Fire Insurance Company Cherokee Insurance Company Chicago Insurance Company Church Mutual Insurance Company Cincinnati Insurance Company Citizens Insurance Co. of America Clarendon National Insurance Company Colonial American Cas & Surety Company Combined Specialty Ins. Company Commerce & Industry Ins. Company Connecticut Indemnity Company Consolidated Insurance Company Constitution Insurance Company Continental Casualty Company Continental National Ind. Company Coregis Insurance Company Crum & Forster Indemnity Company CUMIS Insurance Society, Inc. Daimler Chrysler Ins. Company Dairyland Insurance Company Diamond State Insurance Company Discover Prop & Cas Ins. Company Electric Insurance Company Elevators Mutual Insurance Company Emcasco Insurance Company Empire Fire & Marine Ins. Company 1 ParticipatingMbrs.xls
Argonaut Insurance Company Employers Ins. of Wausau a Mut. Company Employers Mutual Casualty Company Evergreen National Indemnity Company Fairmont Insurance Company Farm Bureau General Ins. Co. of MI Farm Bureau Mutual Ins. Co. of Michigan Farmers Insurance Exchange Farmland Mutual Ins. Company Federal Insurance Company Federated Mutual Insurance Company Federated Rural Electric Insurance Corp. Federated Service Insurance Company Fidelity & Casualty Co. of New York Fidelity & Deposit Co. of Maryland Fidelity & Guaranty Ins. Company Fidelity & Guaranty Ins. Undwrs. Inc. Fireman's Fund Insurance Company Fireman's Fund Insurance Co. of Nebraska Fireman's Fund Ins. Co of WI First American Insurance Company First National Ins. Co. of America First NonProfit Mutual Ins. Company Florists' Mutual Insurance Company Foremost Insurance Company Foremost Property & Casualty Ins. Co. Founders Insurance Company Frankenmuth Mutual Insurance Company Fremont Mutual Insurance Company GE Property & Casualty Ins. Co. GEICO Indemnity Company General Casualty Co. of Wisconsin General Insurance Company of America General Security Insurance Company General Security National Ins. Company Genesis Insurance Company Glens Falls Insurance Company Globe Indemnity Company Grange Insurance Company of Michigan Granite State Insurance Company Great American Alliance Ins. Company Great American Assurance Company Great American Insurance Company Great American Insurance Company of NY Great Lakes Casualty Ins. Company Great Midwest Insurance Company Great Northern Insurance Company Employers Fire Insurance Company Grocers Insurance Company Guaranty National Insurance Company Guideone Mutual Insurance Company Guideone Specialty Mutual Ins. Company Gulf Insurance Company Hamilton Mutual Ins. Co of Cincinnati Hanover Insurance Company Harco National Insurance Company Harleysville Insurnace Company Harleysville Lake States Ins. Company Hartford Accident & Indemnity Company Hartford Casualty Ins. Company Hartford Fire Insurance Company Hartford Ins. Co. of the Midwest Hartford Underwriters Ins. Co. Hastings Mutual Insurance Company Home Owners Insurance Company Horace Mann Insurance Company Hudson Insurance Company Illinois National Insurance Co. Indemnity Ins. Co. of North America Indiana Insurance Company Indiana Lumbermens Mutual Ins. Co. Insurance Company of North America Insurance Company of the State of PA Insurance Company of the West Insurance Corporation of Hanover Insurance Corp. of NY Integon National Insurance Company Intern'l. Business & Mercantile Reassur. Co. Interstate Fire & Casualty Company Lancer Insurance Company Leader Insurance Company Legion Insurance Company Liberty Insurance Corp. Liberty Mutual Fire Insurance Company Liberty Mutual Insurance Company Lincoln General Insurance Company Lumbermens Mutual Casualty Company Lumbermens Underwriting Alliance Lyndon Property Insurance Company Markel American Insurance Company Markel Insurance Company Maryland Casualty Company Massachusetts Bay Insurance Company MEEMIC Insurance Company 2 ParticipatingMbrs.xls
Great West Casualty Company Greenwich Insurance Company Merchants Mutual Insurance Company Meridian Security Insurance Company Meritplan Insurance Company Metropolitan DRT Prop & Cas Ins. Company Metropolitan General Insurance Company Metropolitan Group Prop & Casualty Metropolitan Prop & Cas. Ins. Co. MIC General Insurance Company MIC Property & Cas. Ins. Corp. Michigan Insurance Company Michigan Millers Mutual Insurance Co. Mid-Century Insurance Company Millers Insurance Company Modern Service Insurance Company Monroe Guaranty Insurance Company Motors Insurance Corporation Mutual Service Casualty Insurance Co. National American Insurance Company Narional Ben-Franklin Ins. Co. of Illinois National Casualty Company National Farmers Union P & C National Farmers Union Standard Ins. National Fire Ins. Co. of Hartford National General Insurance Company National Indemnity Company National Interstate Ins. Company National Liability & Fire Ins. Company National Surety Corporation National Union Fire Ins. Co. Pitts. Nationwide Agribusiness Ins. Company Nationwide Insuranace Co. of America Nationwide Mutual Fire Ins. Company Nationwide Mutual Insurance Company Nationwide Prop. & Casualty Ins. Co. Netherlands Insurance Company New Hampshire Insurance Company NipponKOA Ins. Co. Ltd. US Branch NN Insurance Company North American Specialty Ins. Co. North Pointe Insurance Company North River Insurance Company Northbrook Prop & Cas Ins Company Northern Assurance Co. of America Northern Ins. Co. of New York Northern Mutual Insurance Company Memberselect Insurance Company Merastar Insurance Company Ohio Casualty Insurance Company Ohio Farmers Insurance Company Old Republic Insurance Company OneBeacon America Ins. Company OneBeacon Insurance Company Pacific Employers Insurance Company Pacific Indemnity Company Partners Mutual Ins. Company Peerless Insurance Company Penn-America Insurance Company Pennsylvania General Ins. Company Pennsylvania Lumbermens Mutual Ins. Pennsylvania Manufacturers Assoc. Ins. Co. Pharmacists Mutual Insurance Company Philadelphia Indemnity Ins. Co. Pioneer State Mutual Insurance Company Potomac Insurance Company of IL Progressive MI Insurance Company Progressive Specialty Insurance Company Property & Cas. Ins. Co. of Hartford Prudential General Ins. Company Prudential Property & Cas. Ins. Co. QBE Insurance Corporation Quandrant Indemnity Company Ranger Insurance Company Regent Insurance Company Republic Western Insurance Company Republic-Franklin Insurance Company RLI Insurance Company Royal Indemnity Company Royal Insurance Company of America Safeco Ins. Co. of America Safeco Ins. Co. of Illinois Safeguard Insurance Company Secura Insurance A Mutual Company Secura Supreme Insurance Company Security Ins. Company of Hartford Select Insurance Company Selective Insurance Company of SC Selective Ins. Co. of the Southeast Sentry Insurance a Mutual Company Sentry Select Insurance Company Sirius America Insurance Company Southern Michigan Insurance Company Specialty National Ins. Company 3 ParticipatingMbrs.xls
Northland Casualty Company Northland Insurance Company Northwestern National Casualty Company St Paul Property & Casualty Standard Fire Insurance Company Star Insurance Company State Auto Mutual Insurance Company State Auto Prop & Casualty Ins. State Farm Fire & Casualty Company State Farm Mutual Automobile Ins. Co. State National Insurance Company Inc. Stratford Insurance Company Sumitomo Marine & Fire Ins Co Ltd. (US) Teachers Insurance Company The Insurance Company TIG Indemnity Company TIG Insurance Company Titan Indemnity Company Titan Insurance Company Tokio Marine & Fire Ins. Co., US BR Transcontinental Ins. Company Transguard Ins. Co. of America Inc. Transportation Insurance Company Travelers Casualty & Surety Company Travelers Casualty Co. of Connecticut Travelers Indemnity Company Travelers Ind. Co. of America Travelers Ind. Co. of CT Travelers Ind. Co. of IL Truck Insurance Exchange Trumbull Insurance Company St Paul Fire & Marine Ins. Company St Paul Guardian Insurance Company St Paul Mercury Insurance Company Twin City Fire Ins. Company Ulico Casualty Company United Financial Casualty Company United Services Auto Assoc. United States Fire Insurance Company Unitrin Direct Insurance Company Universal Underwriters Insurance Company US Fidelity & Guaranty Company USAA Cas. Insurance Company Utica Mutual Insurance Company Valiant Insurance Company Valley Forge Insurance Company Vanliner Insurance Company Vigilant Insurance Company Warner Insurance Company Wausau Business Insurance Company Wausau Underwriters Ins. Company West American Insurance Company Westchester Fire Insurance Company Westfield Insurance Company Westport Insurance Corp. Winterthur International Amer. Ins. Co. Wolverine Mutual Insurance Company Worldwide Insurance Company XL Specialty Insurance Company Yasuda Fire & Marine Ins. Co. of America Yosemite Insurance Company Zurich American Insurance Company 4 ParticipatingMbrs.xls